1. Understand the business.
Look for books about your desired business and read them cover to cover. Call the business's trade organization, if one exists. Ask them where you can learn the basics. Go to their conventions. Meet other people with the same kind of business. The Internet will help you find them quickly: Five minutes with Google uncovered "The New York Nightlife Association," which you could call for information about bars and clubs. You can also find similar businesses in noncompeting areas, call them and ask the owners for advice. For example, if you want to start a dry cleaning business in New Mexico, call an Ohio dry cleaner to learn about the business.
Once you've got a business owner on the phone, you need to learn the basics of the business plus any hints about being a success. Ask the following questions:
What things do you need to run the business? A restaurant, for instance, needs ovens, a stove, cookware, dishes, a storefront, tables and chairs.
What kind of people do you need to run the business? A restaurant needs a waiter, a cashier, a cook, a dishwasher, a busboy, a bartender and so on.
What are the business's major expenses? Most businesses pay rent, electricity, gas and advertising. A restaurant also buys food and drinks, while a hardware store would need to buy inventory.
Where does the money come from? Restaurants make money from sit-down customers, take-out customers, delivery, catering and bar sales.
What are the common "gotchas" that cause new people in this industry to fail?
What is absolutely necessary for success?
2. Prepare a business plan.
Business Plan Pro software from Palo Alto Software is a great resource. It comes with 400 business plans from many industries, and the plans give financial information for the various kinds of companies. These plans will guide your examination of potential expenses and income, and you may learn some surprising things about your business. For example, you may find that some restaurants make nothing on food, but all their profit comes from drinks. Other restaurants make all their money on catering. Once you've seen the range, you can decide which makes sense for you.
Don't copy a sample business plan's numbers directly, though. Change them to suit your area and market. Rent in New York City is different from rent in Akron, Ohio. Any business whose primary expense is rent will
have to be run differently in the two cities.
You'll also want to talk to a lawyer who knows your kind of business. There may be licensing or health requirements to be taken into account. For instance, in my city, there are a limited number of liquor licenses, and you just can't get one until someone else goes out of business. A lawyer can alert you to those little gotchas.
You can find out much more about writing business plans and more from my business article archives .
3. Make it happen.
To make the business come alive, you need to gather the people, raise the money, rent the building and buy the supplies. You'll be doing all these things at once, but money will usually need to come first.
There are many places to raise money. Though its budget has been severely slashed, the SBA can help with small-business loans. Though larger banks sometimes offer limited small-business resources, many smaller community-oriented banks can work with you to understand your personal situation and provide flexible financing that suits you.
You can also raise money from family and friends. It's a good way to lose family and friends, but if you must do it, use a service like CircleLending to administer the loans and keep them objectively recorded and administered.
Scout out good locations while you're raising money, since rent is often your biggest expense and will affect how much money you need. It's even more important if your business depends on walk-by traffic.
While you're raising money, start romancing people you want to join the company once you're funded. Some of them may join on now, in return for stock and partial ownership of the venture. Also begin scouting locations, finding ways to connect to distributors and suppliers, and basically getting your ducks in a line so that when the money comes in, you can start operations quickly.
What you do next depends on the business you've chosen to start. Keep reading. Keep researching. Learn how to manage people, and make sure to have good outside advisors who can help you think through the tough issues bound to come up when you're a business owner.
Stever Robbins is the founder and President of LeadershipDecisionworks Inc. a national training and consulting firm that helps companies develop the leadership and organizational strategies to sustain growth and productivity over time. His web site is http://LeadershipDecisionworks.com .
Category: Personal Finance